Draft law to amend Swiss Civil Procedure undergoing public consultation

Strengthening collective redress

The most important changes will be in the field of collective redress. This includes the adoption of a new group settlement procedure (opt-out), and regulations allowing associations to seek indemnification of mass and dispersed damages (opt-in). So far, actions by associations are limited to the protection of personality rights, and only enable an association to request a prohibition for ending a violation of personality rights, or declaring a violation.

In addition, the amendment improves the efficiency of the joinder of parties, third party actions and the combination of actions.

Reducing financial barriers to courts

Currently, a claimant must provide advance payments for the costs of proceedings when filing a claim, which according to critics prevents potential claimants from initiating court actions. The draft CPC aims at making a claimant's access to court easier by limiting advance payments to a maximum of half of estimated court costs.

A claimant's position should also be improved by shifting the collection risks from claimants to the courts (i.e. the state.): Currently, courts collect court costs from a claimant's advance payment, but only grant claimants a claim to recoup from defendants. The draft CPC, however, relieves claimants from this risk by requiring that courts no longer collect the costs from a claimant if the claim is admitted, but instead collect from the defendant.

Furthermore, the draft CPC obliges courts to inform parties about the possibility of third party funding. It remains to be seen whether this will promote litigation funding given the dispute size requirements for making funding commercially viable.

Limiting the jurisdiction of the commercial courts

Four of the 26 cantons in Switzerland (Aargau, Berne, St Gallen and Zurich) have commercial courts that hear claims brought against companies. Using these courts is compulsory if the claimant is a company, but optional if the claimant is an individual. The courts' specialized jurisdictions created difficulties that are addressed in the draft CPC.

According to the draft CPC, if multiple parties act as defendants and the commercial court is competent only for some of the claims, jurisdiction will move to the ordinary courts. In addition, commercial courts will no longer decide on disputes in simplified proceedings, rule on disputes relating to an employment contract or the Act on Recruitment Agency and Labour Exchange of 6 October 1989, nor make decisions relating to the rental and lease of residential and business property, or the lease of agricultural property. The limitation regarding simplified proceedings could prove particularly important since Swiss law allows a claimant to limit the amount in a dispute by bringing a partial claim – one that meets the limitations of a simplified proceeding, but still allows an appeal to the Swiss Federal Court against a judgment. If questions of quantum meriut (i.e. the quantification of a claim) are the main subject of the controversy, however, partial claims as a short cut to a simplified procedure may not be of assistance.

Extending the scope of conciliation proceedings

Dispute resolution by conciliation has a long tradition in Switzerland. In line with this, the draft CPC aims at allowing – at the claimant's discretion – conciliation proceedings for additional disputes in the jurisdiction of a single cantonal court.

Similarly, the jurisdiction of the conciliation authorities for resolving a dispute will be extended. Conciliation authorities will have the power to submit a proposed judgment in financial disputes of up to CHF 10,000 in value, instead of the present CHF 5,000.

Extending the legal privilege to in-house counsel

At present, attorney-client communication is only protected if involving practicing (external) attorneys. For the purposes of civil proceedings, the draft CPC proposes including in-house legal counsel in this protection. Should such a proposal become law, this could potentially open the door for future extensions, which would protect the communications of in-house counsel in criminal and administrative proceedings as well.

Conclusion

It is too early to speculate whether the entire draft CPC or only parts will make it into law. It is clear, however, the changes proposed are far from cosmetic and could potentially have a major impact on civil litigation in Switzerland.

For more information on the draft CPC and Swiss civil law, please contact our experts.